Biggest advertisers: Top 100 advertisers

Although brands boosted their spending in the second half of 2006 after a slow start to the year, much was allocated to low-budget activity such as sales promotions. Jane Simms reports.

At nearly £3.7bn, the total advertising spend of the UK's biggest
companies was marginally higher than in 2005 - up 0.76% (£27.5m).
But the blanket figure is far from the full picture, as 2006 was riven
in two, with the first half a comparative period of desolation in terms
of advertising, as companies cut their spend, only to bolster it later;
during the third quarter, corporate profits rose to a 40-year high, with
an attendant rise in marketing spend.

Indicative of the pervading mood, the top three advertisers - Procter &
Gamble, Unilever and the COI - all cut their spend year on year, by 2%,
16% and 19% respectively. 'Overall, 2006 was a poor year for advertising
and marketing spend, reflecting low sales and profits,' explains Chris
Williamson, head of economics at NTC Economics, which conducts the
research for the Institute of Practitioners in Advertising's (IPA)
Bellwether Report. 'Marketing money was diverted into sales promotions,
and rather than committing to big mass-media campaigns, brands
experimented with lower-budget alternatives, including the internet,
which could be turned on and off more swiftly.'

The second-half upturn nevertheless bodes well for 2007. Encouraged by
robust balance sheets, companies are likely to increase their spend
considerably, predicts Williamson. 'They started the year in more
buoyant mood than at any time since the dotcom boom,' he says. 'But this
time the optimism is not inflated by any equivalent of the internet
bubble.'

This year is set to be characterised by a growth in more sophisticated,
integrated campaigns that work across a range of media, including the
internet. Not only will this allow brands to better target key
audiences, it will offer them better value.

Lloyds TSB, which increased its adspend by nearly 50% to more than
£24m last year, exemplifies this approach. It bolstered its TV
spend by 20%, its radio spend by 630% to nearly £4m and its online
budget significantly, according to Julian Elliott, director of customer
and market intelligence. Spend on outdoor, which Elliott says delivers
'regional weight', was also increased, by 94% to £1.7m. The bank
works ever-more closely with its lead ad agency RKCR/Y&R and media
agency Zenith-Optimedia to ensure that creative ideas work across media,
as exemplified by its Hollywood-themed 'Easy living' mortgage campaign,
which ran on TV, radio, outdoor and in branches.

The bank uses TV 'extremely cautiously' because of the expense involved,
says Elliott. However, he believes the medium is far from moribund. 'It
has a unique ability to deliver opinion-changing advertising,' he adds.
'The challenge is getting it to work better with other media to create a
richer mix.'

Financial services was the one sector in which all top five advertisers
increased their budgets last year. Conversely, the top five automotive
brands all cut spend, with Renault making the biggest reduction, by 28%,
to just over £40m.

Outdoor was the only medium on which Renault increased its spend; its TV
and cinema budgets fell by 42% and 44% respectively. However, Jeremy
Townsend, the marque's manager of marketing communications, claims this
does not tell the whole story 'We significantly increased our investment
in sponsorship and events, which are both outside normal media spend
monitoring,' he says.

'Poor results by GM and Ford underline just how tough things are for the
motor industry, and ad budgets have been squeezed,' says Nigel
Wonnacott, head of communications at the Society of Motor Manufacturers
and Traders. 'Manufacturers are being more thoughtful about how they
"pull" consumers in, through, for example, experiential marketing, such
as Land Rover's off-road courses. There has also been a shift to more
targeted advertising, such as online.'

In the retail sector, adspend was boosted by strong uplifts from Tesco,
Boots and, most notably, M&S, which increased its outlay by 38% for food
and 55% for non-food activity. In November, M&S posted a half-year
pre-tax profit of £405m, up from £306m the previous year,
fuelled by its 'Your M&S' campaign, which won the Grand Prix at the 2006
IPA Effectiveness Awards.

Yet no retailers appear in the top five advertisers in any media
category. Richard Hyman, managing director of Verdict Consulting,
believes one explanation is the shift toward using marketing tools such
as loyalty cards and customer magazines, which allow for constant
dialogue.

In the mobile telecoms market, Vodafone stands out with a 27% rise in
adspend to £62m; Orange, T-Mobile and O2 all cut their budgets.
However, the current data does not show spend on digital advertising,
which is calculated later in the year. According to Dominic Chambers,
head of brand and marketing communications at Vodafone UK, the company's
digital spend has doubled for each of the past three years. 'Our
priority is digital,' he admits. 'It allows us to reach discrete
audiences and create a richer experience by creating interaction.'

Vodafone more than doubled its radio spend to nearly £12m, placing
it second only to the COI in the category. 'About 25% of radio listening
is now online, and radio is a great way to reach people on the move,'
says Chambers. The company also increased its outdoor spend by 39% to
£19m, making it the medium's second-biggest user, marginally
behind Unilever.

One sector where brands have been slower to relinquish TV in favour of
more targeted media, particularly the internet, is FMCG. 'We are only
just dipping our toes in the water of online, because the way forward
for FMCG brands is less clear than it is for other sectors,' admits
Bernard Balderston, P&G's associate director of media. He further plays
down the significance of P&G's reduction and reallocation of adspend
last year. 'In a company our size, with our range of products and
categories and competitive pressures, there is bound to be variation
year by year, but there has been no major strategic shift,' he says. 'We
continue to ensure that we reach our customers in the places where they
are most receptive to our message.

Source: Nielsen Media Research
Note: 2005 rankings may be different from last year's Top 100 because of
updates to the Nielsen data
Tables cannot be republished without prior written permission from
Nielsen Media Research.

METHODOLOGY
All figures are estimated costs of buying media space based on factors
such as rate card, industry discounts and viewing figures. Data includes
TV, radio, consumer press, cinema and outdoor (excluding ambient,
international sites or point of sales). It does not include actual
billings or agency revenues.

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